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Revenue Plan concerns

“We are concerned about a revenue plan,” said L.G. Raun, a Texas rice producer and leader in the rice industry. “The fatal flaw in a revenue program is that we have to rely on historical prices.”

He said a period of sustained low prices would be ruinous to rice producers and the safety net would disappear. “The direct payment,” Raun said, “is very bankable.” He explained that with assurance of the direct payment a producer can show lenders at least a minimal cash flow.

“Without the direct payment, we’re concerned about bankability,” he said.

Lucas agreed that revenue assurance leaves gaps. He said he understood the uncertainty of agriculture and that good years are often followed by bad ones and crafting a program based on higher valued commodities leaves producers more vulnerable.

He offered the possibility of Congress having to revisit a farm program if prices deteriorate. He also said that Congress would be under extreme pressure for the next five to 10 years to hold expenses in check.

“The $23 billion savings is achievable,” Lucas said. “But it’s sheet ice we’re sliding on. And to achieve that savings, significant things must happen and there is a big bulls-eye on direct payments.”

He said the Super Committee is not “stacked in favor of the countryside. But it reflects the flavor of the country.” The committee may take up ag spending or leave it to Congress’ ag committees. “It may decide to do something, do nothing (with ag) or not get a bill. But the administration will push the Democrats on the committee and Republicans want to get a bill. We’re traveling in uncharted waters. But I’m working with the other three principals on the ag committees.”

Steve Verett, executive vice president, Plains Cotton Growers, told Lucas that farmers “need some kind of reference price” included in the safety net. “It only takes one or two years of low prices to ruin a farmer. That will happen sooner or later.”

He also thanked Lucas for his leadership. “It’s a comfort to know that we have people who have our backs and keep our interests in mind,” he said.

Lucas said the national media, as well as many legislators, have a skewed view of how agriculture works in the country. The past few years of good yields and high commodity prices created an impression that farmers are making huge profits and no longer need the safety nets that have served them well in past farm programs.

“We have had decent weather for the past five years, with the exception of the drought in the Southwest this year,” Lucas said. That string of good years, added to pressure to reduce the deficit and constant criticism from the national media, puts farm programs in the crosshairs of budget hawks, Lucas said.